Business leaders economy's state still dire

Few countries have suffered as much as Japan during the global recession. In fact, Japan was officially in a depression, after GDP shrank for four quarters in a row. But today, its export-oriented economy showed tentative signs of life with a one percent rise in GDP - albeit off a low base. Treasury Secretary Ken Henry has warned business leaders not to get too carried away by the recent run of good numbers.

Transcript

ALI MOORE, PRESENTER: Few countries have suffered as much as Japan during the global recession. In fact, Japan was officially in a depression after GDP shrank for four quarters in a row.

But today's its export-oriented economy showed signs of life with a 1 per cent rise in GDP albeit off a low base It may add to the picture of a global economy on the mend. But Treasury Secretary Ken Henry has warned business leaders not to get carried away by the recent run of good numbers.

Andrew Robertson reports.

ANDREW ROBERTSON, REPORTER: While the governor of the Reserve Bank has been talking up the economy of late, Treasury secretary Dr Ken Henry has a more sober view.

KEN HENRY, TREASURY SECRETARY: I think we want to be a little careful not to prematurely declare that the war is over.

ANDREW ROBERTSON: The reason, according to Dr Henry is that large parts of the rest of the world continue to face serious economic problems, which may yet hit Australian shores.

KEN HENRY: It's possible that there will be a second shockwave, I have no reason to believe it will be like the first shockwave in size and intensity, it won't, but there could be a second shockwave to hit us, and that, too, could have implications for future growth.

ANDREW ROBERTSON: Dr Henry shared the platform with the chief executives of some of Australia's biggest companies who expressed a slightly more confident view. Wesfarmers Richard Goyder revealing in the last 12 months his company has boosted its workforce by 10,000.

RICHARD GOYDER, WESFARMER CEO: It's prudent for the Government at this stage to keep a lid on things at the moment. I don't think the world has magically turned around. But there are some positive signs at the moment.

ANDREW ROBERTSON: Ken Henry is also chairman of the Government's review of the taxation system, and says his committee will seize a one in a lifetime opportunity to radically shake up the system.

KEN HENRY: We are trying to look out at least a decade, two decades, at the way in which the Australian tax transfer system will need to evolve if the Australian economy is able to meet the challenges of the future.

ANDREW ROBERTSON: The conference also discussed one of the most contentious current issues for business, the repeal of John Howard's WorkChoices legislation. Wesfarmers Richard Goyder believes the workplace laws could strip more than $70 million from his bottom line through added costs, while Leighton Holdings Wal King also has reservations.

WAL KING, LEIGHTON HOLDINGS CEO: We would have preferred the old regime, but we'll live with the new regime. And I think the ingredients are there for hopefully a cooperative environment going forward with the unions. We believe the unions in the main do act responsibly.

ANDREW ROBERTSON: Probably the biggest challenge for the business community for many years to come will be climate change and it's no surprise therefore that business leaders have been closely watching the wrangling around the Government's attempt to get its global warming legislation through parliament.

WAL KING: There's political agenda run by the Opposition and the Government, I don't really comment on that. We'll get what we get at the end of the day, it's really a political situation.

RICHARD GOYDER: When the political games have been played out, what is really important is to get the climate change outcome, ETS outcome working for the Australian economy for business in the economy, obviously in terms of reducing CO2 emissions over time. But that doesn't put us at a competitive disadvantage to other countries and businesses.

ANDREW ROBERTSON: Which is why corporate Australia will be keenly monitoring further political compromises.